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Accelerating Customer Experience Improvements through Agile

Amy Cribbs explains how new, Agile ways of working at Vanguard get improvements into the market faster and ensure they really meet client needs.

By Rob Markey

June 27, 2019

Podcast

Accelerating Customer Experience Improvements through Agile

Since its founding in 1975, mutual fund giant Vanguard has relied on a virtual presence—phone, mail and, more recently, digital, web and mobile—rather than physical storefronts. That heritage as a virtual direct distributor created a strong customer-service culture that has helped make Vanguard the industry leader in customer loyalty.

But a few years ago, executives decided the company could do even better. They focused on improving client experience and tapped Vanguard veteran Amy Cribbs to lead those efforts.

That’s not to say the company had huge gaps. Net Promoter Scores were strong, and Vanguard’s business track record—it has recently accounted for about 50% of the net flows into the mutual fund industry—certainly didn’t suggest customers were unhappy.

And keeping pace with these changing expectations, she says, meant more than just investing money in client experience—it meant shifting to a new operating mindset and new ways of working that would give Vanguard the flexibility and speed necessary to respond continuously to changes in customer needs. Traditional project-based approaches, conducted by one functional team with set start and finish dates, began to give way to an Agile, cross-functional approach that made client experience everyone’s ongoing responsibility.

“The whole organization is being rewired away from purely having functional accountability to having both client accountability as well as functional accountability,” Amy explains. For example, functions such as risk management, which protect Vanguard’s customers and their investments, began working closely with Agile teams on improving specific customer episodes. That direct exposure to client needs helped them realize that clients understood and appreciated their protective role, but that they needed to alter some of their policies to avoid unintended consequences for client experience.

You can listen to my conversation with Amy on iTunes, Stitcher or your podcast provider of choice, or through the audio player below.

In the following excerpt, Amy explains how one Agile team eliminated a pain point for clients—but only after gaining a better understanding of what truly caused the pain.

Rob Markey: Take me through one of the journeys or episodes where you set up a persistent team.

Amy Cribbs: So, we have a team we established for our Financial Advisor Services business. We distribute services and asset management capabilities to those who serve others—you know, they work for other organizations. They can be Registered Investment Advisors, advisers, bank trust professionals. And one of the things we have done is created policies around our funds to ensure that the newest client trying to invest in our funds does no harm to the existing client base. We are a client-owned organization, so it's really important that a large trade, for example, does not create a pricing dislocation in our funds that would have negative impacts on the rest of the shareholders.

Rob Markey: Sure, or a taxable event for the fund, and then the tax is borne by other investors.

Amy Cribbs: Yes. So this policy is known as our Large Transaction and Qualified Transaction Policy. It shows up in our loyalty data as one of the pain points for our financial advisers, and there has always been a lot of debate within Vanguard about whether the policy was a problem or not.

We assembled a team that included a journey owner, episode owner, data analysts, user experience professionals—both research and design professionals—and IT engineering, and we co-located them. We gave them clarity about what their outcome was to be: “We want you to improve the net favorable score of that trading experience.”

Rob Markey: Net favorable score is essentially NPS?

Amy Cribbs: Yes, at the experience level. And it was not positive.

And we said, “You need to improve that, and we believe that will breed better overall loyalty and commitment to Vanguard.”

Rob Markey: Presumably, that wasn't the only objective you gave them. You probably gave them some constraints like “We don't want it to cost a gazillion dollars” and “We don't want you to break any compliance rules.”

Amy Cribbs: That’s right. Absolutely. Do no harm to the risks we were trying to manage or to the shareholder base who are loyal customers.

But what we were looking for them to do was, first of all, give us better insight. We knew there was pain, but we didn’t understand the pain entirely. What that team has managed to do is sort of debunk myths within the organization, because what we found out was that it wasn't the policy. It was the processes around how a policy gets implemented and managed in the organization.

Rob Markey: Can you give me an example?

Amy Cribbs: When you go to do a trade, we have to have a notice at a certain time of day. It has to be approved by certain people within the organization, including the portfolio manager, our fund pricing team and our risk manager.

What we found was that there wasn't a whole lot of transparency to the process. It was not a very digital process. I think there was a lot of confusion [on the part of] the clients on how it worked. And they couldn't follow the pattern of when things got approved and when they didn't.

Rob Markey: It seemed arbitrary to the person who was trying to execute the trade, the client.

Amy Cribbs: Yes. And what we found out was they didn't have a problem with policy. In fact, clients praised us for the policy. Clients were [saying], “We love that Vanguard is so committed to our interests as existing shareholders that when we come in with this trade, you want to protect us and others from any harm that a large trade might potentially create.” So they weren't looking for us to eliminate the policy, and that was really enlightening to us.

Rob Markey: That was a surprise.

Amy Cribbs: Yes. It was really the mechanics of how we implemented and administered the policy. And so that team did a couple things: They created a clear digital pathway that gave a lot of transparency to where things were in motion. They worked across these organizational lines inside Vanguard to gain agreement around what was critical that needed to stay in that process and what could we eliminate. So they simplified the process.

Rob Markey: So, they reduced the number of approvals required?

Amy Cribbs: Yeah, they actually cut the time and the number of approvals down by like half. Probably the most meaningful thing they did, though, was to really begin to quantify risk. [They looked at] what is causing risk to the pricing realities and the tax implications of the fund vs. what isn't, and they've been able to shape conversations with our senior people in investment management and fund pricing to say, “What is the better way to manage this risk? How can we use data and analytics and predictive patterns to do this in a way where the majority of these don't even need to go through an approval process?” And so they've actually cut the number of things that even have to go through any kind of approval by half.